Shares sink to 8,000 level as markets await Fed

STOCKS BLED on Tuesday, pulled down by fears of a rate hike by the United States Federal Reserve as well as Mitsubishi Corp.’s sale of a significant stake in Ayala Corp. (AC).

The main index fell back to the 8,000 level after losing 2.13% or 175.94 points yesterday, closing at 8,059.60. The bloodbath saw the index hit an intraday low of 8,015.49.

The broader all-shares index also gave up 2.02% or 100.31 points to 4,848.49.

This officially places the index at a correction, as it has now fallen 12% from its previous high of 9,058.62 last Jan. 29.

“I think the heavy sell- off today was driven by AC ( Ayala Corp.) after Mitsubishi sold a significant stake at P934 per share,” IB Gimenez Securities, Inc. Research Head Joylin F. Telagen said in a text message on Tuesday.

Mitsubishi reportedly sold around 6.2 million shares in AC earlier in the day at a 4.6-7.5% discount, equivalent to around a percent of its shareholdings in the conglomerate. AC was the second most actively traded stock for the day, losing 7.23% or P73 to close at P937 each.

Prior to the sale, Mitsubishi owned 10.17% of AC, 48.96% is owned by Mermac, Inc., while the rest are held by the public.

Ms. Telagen also attributed the sell-off to the cautious tone in the market ahead of the US Fed’s policy meeting from March 20-21.

Weakness continued in international markets, as the Dow Jones Industrial Average lost 1.35% or 335.60 points to 24,610.91. The S& P 500 also slipped 1.42% to 2,712.92, while the Nasdaq Composite index was down 1.84% to 7,344.24.

Asian indices ended mixed, tracking the volatility in US markets.

“All eyes are on the results of the US Federal Reserve’s two-day policy meeting. Locally, investors may be waiting for the index to hit its low ahead of the BSP’s (Bangko Sentral ng Pilipinas) monetary policy meeting on March 22. We may see some let up after the BSP sets policy direction,” Papa Securities Corp. trader Gabriel F. Perez said in an e-mail.

All sector indices went down, with services incurring the biggest loss at 2.79% or 47.99 points to 1,671.88. Holding firms dropped 2.04% or 167.71 points to 8,040.35; property shed 1.97% or 73.05 points to 3,635.50; industrials dropped 1.96% or 225.37 points to 11,275.35; financials declined 1.93% or 41.70 points to 2,110.86; while mining and oil closed 1.88% or 201.23 points lower to 10,501.61.

Some 5 billion issues switched hands for a total value turnover of P18.54 billion, significantly higher than Monday’s P8.48 billion.

Decliners prevailed for the day, standing at 176 against 53 that gained, while 37 closed flat.

Foreign investors were back in selling mode, with net outflows ballooning to P3.84 billion against the previous session’s net purchases of P173.73 million.